Financial Power of Attorney

Why You Need a Financial Power of Attorney

Life can be unpredictable, and situations like illness, injury, or cognitive decline can prevent you from managing your financial matters. Without a Financial Power of Attorney in place, the probate court may have to appoint a guardian to make financial decisions on your behalf, which can be time-consuming and costly. By establishing a Financial Power of Attorney, or General Durable Power of Attorney, you maintain control over who will handle your finances and avoid the need for court intervention.

Key Features of a Financial Power of Attorney

1. Selection of Agent: You have the power to choose one or more agents to act on your behalf. It’s recommended to name a primary agent and at least one successor agent who can take over if the primary agent cannot serve.
2. Scope of Authority: You determine the extent of the agent’s powers. This can include managing real estate, handling banking and investment transactions, managing business interests, and dealing with insurance and annuities. You can customize the Financial Power of Attorney to grant only the specific powers you are comfortable delegating.
3. Durability: A General Durable Power of Attorney remains effective even if you become mentally incapacitated, ensuring that your financial matters are managed seamlessly.
4. Ohio’s Statutory Form: Ohio’s Uniform Power of Attorney Act (UPOAA) includes a statutory form designed to prevent financial abuse. This form outlines the agent’s duties and specific actions they are prohibited from taking unless explicitly authorized.

Recent Changes to Ohio’s General Durable Power of Attorney Law

Effective March 22, 2012, Ohio adopted the Uniform Power of Attorney Act, which updated the laws governing General Durable Power of Attorney documents. The revised law aims to prevent financial elder abuse by providing clearer guidelines for the agent’s responsibilities and prohibiting certain actions unless specifically authorized in the document. If your Financial Power of Attorney was created before this date, it’s advisable to have it reviewed by an attorney to ensure it complies with current Ohio law.

Responsibilities of an Agent Under a General Durable Power of Attorney

An agent acting under a Financial Power of Attorney, or General Durable Power of Attorney, must always act in the best interest of the principal and within the scope of the authority granted in the document. The agent must:

• Act in accordance with the principal’s known wishes.
• Avoid conflicts of interest.
• Preserve the principal’s estate plan, if they are aware of it.
• Keep detailed records of all actions taken under the authority of the General Durable Power of Attorney.

Powers Granted Under a Financial Power of Attorney

The principal can grant a wide range of powers under a Financial Power of Attorney, including:

• Managing real estate transactions.
• Handling banking and investment accounts.
• Overseeing business operations.
• Accessing digital assets and online accounts.
• Managing insurance and annuities.

In 2017, Ohio law was updated to allow agents to access the principal’s digital assets, further expanding the scope of the General Durable Power of Attorney.

Limitations and Safeguards in a Financial Power of Attorney

Certain actions cannot be performed by the agent unless explicitly authorized in the General Durable Power of Attorney. These include:

• Changing beneficiary designations.
• Creating or modifying a trust.
• Making gifts of the principal’s property.
• Changing rights of survivorship.

Given the significant powers a Financial Power of Attorney grants, it is crucial to choose an agent carefully and consider safeguards such as naming co-agents or requiring the agent to report their actions to another trusted individual.

Changing or Revoking a Financial Power of Attorney

As long as the principal retains mental capacity, they can change or revoke their Financial Power of Attorney or General Durable Power of Attorney at any time. This is typically done through a written document, which should be distributed to all relevant financial institutions. If the POA was recorded or included authority over real estate, the revocation should also be recorded with the county recorder.

When Does a General Durable Power of Attorney Take Effect?

A General Durable Power of Attorney can take effect immediately or at a future date or event, such as the principal’s incapacitation. This is known as a “springing” POA. It’s essential to carefully consider when the powers will take effect, as a “springing” POA can sometimes be challenging to use with financial institutions.

When Does an Agent’s Authority End?

An agent’s authority under a General Durable Power of Attorney ends when the document specifies, when the principal revokes it, or upon the principal’s death. It’s important to note that an agent can never act after knowing that the principal has died.

Choosing the Right Agent for Your Financial Power of Attorney

Selecting the right agent for your Financial Power of Attorney is a significant decision. This person will have substantial control over your financial affairs, so it’s crucial to choose someone who is trustworthy, responsible, and capable. Consult with an experienced estate planning attorney to draft a Financial Power of Attorney or General Durable Power of Attorney that meets your specific needs and ensures your financial future is protected.

Getting Help With Financial Powers of Attorney

We serve clients looking to create a durable power of attorney in Franklin, Delaware, Licking, Fairfield, Pickaway, Madison, Union, and other Central Ohio counties.

We will discuss your situation to determine how your power of attorney should be designed to ensure you avoid guardianship and keep your affairs private should you become incapacitated, and assist you with the other important estate planning documents as well.